Mutual Agreement Procedures
In the course of cross-border activities, physical or legal persons can be subject to taxation measures by two or more States or Jurisdictions, which in turn can lead to double taxation not in accordance with Austria’s obligations under international treaties. In order to resolve such cross-border tax disputes, international (tax) treaties and Austria’s domestic law institute a mechanism aimed at resolving the dispute and ensuring taxation in accordance with the treaties by means of a mutual agreement between the States or Jurisdictions involved.
A mutual agreement procedure (MAP) in a particular case is a procedure which commences by request of a particular taxpayer or particular taxpayers and is aimed at the elimination of taxation not in accordance with the treaties for that particular taxpayer or those particular taxpayers. If the agreement sought cannot be reached within the time frame set by the particular treaty (see “Legal Sources” below) despite the best endeavours of the States or Jurisdictions, then the procedure ends without agreement. However, some treaties and domestic law foresee a right for the taxpayer(s) to request the arbitration of the dispute.
The goals of the MAP are:
- to ensure that the allocation of taxing rights agreed under the (tax) treaties is upheld;
- to eliminate the taxation not in accordance with the treaties for the taxpayer(s).
Double Tax Conventions (DTCs)
Austria’s treaty policy with respect to the MAP is to closely follow the OECD Model Tax Convention in its negotiation of DTCs. All DTCs concluded by Austria contain a MAP provision patterned after the Model Convention. In some cases, they also contain arbitration clauses which permit the binding resolution of a dispute despite an inability of the States and Jurisdictions involved to reach a mutual agreement (see Annex 3 to the MAP Guidance (PDF, 981 KB) issued by the Austrian Ministry of Finance).
EU Arbitration Convention
The EU Member States have concluded an Arbitration Convention, which only applies to transfer pricing disputes. If a MAP does not lead to an agreement fully eliminating the taxation not in accordance with the Convention within two years of the (full and detailed) submission of the case to one of the competent authorities of the States or Jurisdictions involved, then the competent authorities are required to set up an advisory commission which will issue an opinion on the resolution of the dispute. The two-year deadline can be postponed with the agreement of the taxpayer(s).
EU-Tax Dispute Resolution Act (EU-TDRA)
The EU-TDRA (EU-Besteuerungsstreitbeilegungsgesetz, “EU-BStbG”), which has been in force since 1st September 2019 and is applicable for taxable years beginning in 2018, is the Austrian implementation tax act of the EU Dispute Resolution Directive. The EU-TDRA foresees a MAP ending in a mandatory binding resolution for intra-EU cross-border tax disputes resulting from different interpretations or applications of DTCs or the EU Arbitration Convention. Once a taxpayer submits a request for dispute resolution under the EU-TDRA, their access to the MAP under DTCs or the EU Arbitration Convention is barred.
Initiation of the MAP
The taxpayer(s) or its/their legal representatives have to submit a request for a mutual agreement containing the full set of information required by the MAP Guidance (PDF, 981 KB) and /or Section 9 EU-TDRA, respectively, within the time frame foreseen by the legal instrument(s) being relied on.
The MAP request pursuant to a DTC or the EU Arbitration Convention should, as a rule, be submitted to the State or Jurisdiction of which the taxpayer is a resident. By contrast, the EU-TDRA generally requires the submission of the request to the competent authority of each of the States or Jurisdictions involved by each taxpayer involved.
A MAP request pursuant to a DTC or the EU Arbitration Convention must be submitted by post to the following address:
Austrian Federal Ministry of Finance
International Tax Law Division (Division IV/8)
1010 Vienna, Austria
The MAP request pursuant to the EU-TDRA must be submitted electronically, on the FinanzOnline platform. For additional information on the filing and content of such a request, see explanations in section “Internationales Verständigungsverfahren” on the FinanzOnline platform. If an electronic filing is not possible due to the lack of the technical requirements or access rights to the platform, then the request has to be submitted by post to the above-mentioned address and using the following forms:
- Complaint according to Section 8 paragraph 2 of the EU Tax Dispute Resolution Act
- Complaint according to Section 8 paragraph 2 of the EU Tax Dispute Resolution Act (legal persons)
After receipt of the MAP request, the competent authority will evaluate whether the requirements for the initiation of the MAP are fulfilled. The MAP will only be initiated if all formal and material requirements are fulfilled and Austria cannot unilaterally resolve the dispute.
Further information on the MAP:
The States or Jurisdictions involved in the dispute bear their own costs. The costs incurred by the taxpayer are not refunded. The submission of MAP requests is free of charge.